alpha231616967560 Posted March 20, 2012 Share Posted March 20, 2012 I am reading Fatal Risk presently. According to that account of events, Eliot Spitzer pretty much compelled the board keep Greenberg out of the company under threat of criminal prosecution. Greenberg was himself a lot more conservative (read: sane) in his evaluation of risk than was the management that replaced him. I imagine that this is largely because he had decades of experience that were just not possible to replace, and that he was able to actually understand / evaluate some of the risk in FP (at least early on). The timing was very bad. Greenberg was leaving at about the same time that FP was beginning to get more reckless, and this coincided, of course, with the rise of sub-prime. To be sure, Greenberg was not free of culpability for what happened, but he wasn't allowed to be around to be responsible for it either. Link to comment Share on other sites More sharing options...
MrB Posted March 20, 2012 Share Posted March 20, 2012 http://wn.com/benmosche Link to comment Share on other sites More sharing options...
alpha231616967560 Posted March 20, 2012 Share Posted March 20, 2012 he read the annual reports and knew what was going on. Questionable. The CEO and his staff wrote the annual report and didn't know what was going on. We don't know if HG would have put the clamps down or not. Agreed. Impossible to be sure. Via anecdote, anyhow, the post-Greenberg culture was still extremely aggressive but without the risk control. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted March 22, 2012 Share Posted March 22, 2012 http://online.wsj.com/article/SB10001424052702304724404577298070322143252.html AIG on Thursday paid $1.5 billion to the U.S. Treasury to close out the government's investment in a bailout-era vehicle that held AIG assets. The move, coming on the same day AIG completed a $2 billion debt sale, removes the government's claim on the assets that had been put up as collateral against the repayment. The payment retires the preferred equity investment in the vehicle, called AIA Aurora LLC, a year ahead of schedule. Link to comment Share on other sites More sharing options...
Rabbitisrich Posted March 22, 2012 Share Posted March 22, 2012 For all that people complain about TBTF banks (read the recent Dallas Fed annual), the government's handling of its senior cumulative preferred stake remains inexplicably generous to shareholders. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted March 23, 2012 Share Posted March 23, 2012 For all that people complain about TBTF banks (read the recent Dallas Fed annual), the government's handling of its senior cumulative preferred stake remains inexplicably generous to shareholders. There are SO many ways the feds could have mishandled this thing but damn if they haven't done a decent job, indeed. Link to comment Share on other sites More sharing options...
PlanMaestro Posted March 26, 2012 Author Share Posted March 26, 2012 Deutsche Bank and Cramer pumping it. If it weren't so cheap I would be thinking on selling the warrants ... but it is cheap. AIG (AIG) has nearly 40% upside potential as the company continues to shed noncore assets and begins a buyback program that should be much bigger than investors are expecting, writes Deutsche Bank analyst Joshua Shanker in a note today. Shanker sees the stock hitting $40 per share, up from about $29 today. “We believe $15-20 billion (or even more) worth of buybacks over the next twelve months is achievable as the Treasury and AIG sell off the remaining non-core assets. We believe book value per share growth in excess of 30% is possible if shares continue to hover around their current price.” As of the end of the fourth quarter, AIG had about 1.897 billion shares; based on that number its market cap today would be about $55 billion. Based on Shanker’s projections, the company could presumably repurchase about a third of its shares. Shanker notes that AIG has also had success at selling its non-core assets, and some big banks may be in the market to buy some more of its assets. Link to comment Share on other sites More sharing options...
PlanMaestro Posted March 27, 2012 Author Share Posted March 27, 2012 Benmosche at Cramer http://video.cnbc.com/gallery/?video=3000080531 Link to comment Share on other sites More sharing options...
BargainValueHunter Posted March 27, 2012 Share Posted March 27, 2012 Quick question about the AIG warrants (and the BAC warrants, as well). Why would you sell if they expire 9 years (or 6-7 years for the BACs)? That kind of time value seems extraordinary given the buybacks, dividend increases and book value growth that we can't even imagine at this early stage. Imagine having thousands of cheap Wells Fargo or Citigroup far out-of-the-money warrants issued in 1991 that expired in 2000. Not that history repeats but you would have been sitting on a goldmine of leverage. Has the New Year's to now run-up destroyed that much time value? Link to comment Share on other sites More sharing options...
PlanMaestro Posted March 27, 2012 Author Share Posted March 27, 2012 Quick question about the AIG warrants (and the BAC warrants, as well). Why would you sell if they expire 9 years (or 6-7 years for the BACs)? I think you answered your question. Why I am not selling and why I might sell (best alternative). Link to comment Share on other sites More sharing options...
txlaw Posted March 27, 2012 Share Posted March 27, 2012 Benmosche at Cramer http://video.cnbc.com/gallery/?video=3000080531 I freaking love Bob Benmosche. He's the freaking man! Link to comment Share on other sites More sharing options...
txlaw Posted March 27, 2012 Share Posted March 27, 2012 Benmosche at Cramer http://video.cnbc.com/gallery/?video=3000080531 I also love that he talks to Hank Greenberg about the company. I hope Mr. Benmosche stays CEO of AIG for as long as possible. Link to comment Share on other sites More sharing options...
Olmsted Posted March 27, 2012 Share Posted March 27, 2012 AIG (AIG) has nearly 40% upside potential as the company continues to shed noncore assets and begins a buyback program that should be much bigger than investors are expecting, writes Deutsche Bank analyst Joshua Shanker in a note today. Shanker sees the stock hitting $40 per share, up from about $29 today. “We believe $15-20 billion (or even more) worth of buybacks over the next twelve months is achievable as the Treasury and AIG sell off the remaining non-core assets. We believe book value per share growth in excess of 30% is possible if shares continue to hover around their current price.” Is anyone else puzzled by this analyst's conclusions? His buyback numbers are more optimistic than my own - yet his price target is only $40. It doesn't follow from his analysis. Is there some secret analyst rule that they only put a price target on a stock +/- 30% or something? Link to comment Share on other sites More sharing options...
PlanMaestro Posted March 27, 2012 Author Share Posted March 27, 2012 Is anyone else puzzled by this analyst's conclusions? His buyback numbers are more optimistic than my own - yet his price target is only $40. It doesn't follow from his analysis. Is there some secret analyst rule that they only put a price target on a stock +/- 30% or something? Analyst target prices are and will always be a joke. A compromise between conveying information and giving respect to Mr Market and other analysts. Regarding the buyback program, Benmosche was bold at Cramer's. He said that between AIA (8B), ILFC (7B), ML III (7B), escrow cash (1B), and others, there is at least 23B buying power, not even considering dividends from Chartis and SunAmerica. In the meanwhile the US Treasury needs 36B from its equity stake to breakeven. Benmosche said he assumes this buying power will be used to buyback the US Treasury. Link to comment Share on other sites More sharing options...
finetrader Posted March 27, 2012 Share Posted March 27, 2012 If AIG wants to buyback US Treasury and don't want to wait for stock price to get above break even price for Treasury(around 29$ I believe), they could make a tender offer above current stock price, like Seaspan did this winter ( http://ir.seaspancorp.com/releasedetail.cfm?ReleaseID=632786 ). This could be good for everybody! Link to comment Share on other sites More sharing options...
gokou3 Posted March 27, 2012 Share Posted March 27, 2012 Regarding the buyback program, Benmosche was bold at Cramer's. He said that between AIA (8B), ILFC (7B), ML III (7B), escrow cash (1B), and others, there is at least 23B buying power, not even considering dividends from Chartis and SunAmerica. In the meanwhile the US Treasury needs 36B from its equity stake to breakeven. Benmosche said he assumes this buying power will be used to buyback the US Treasury. He also mentioned that he expects the govt to make $5-10B profit when all the dust is settled. Has anyone kept track of the profit that the government made so far? That will give a rough estimate of the PPS that Bensmoche thinks the Treasury will sell its equity stake at. I believe the govt has already made a few $B in MLII. Btw, I have finally initated a long position in AIG through 2014 LEAPS. Hope DB is right that AIG will buyback $20B+ shares and at a price close to UST's breakeven. Thanks to everyone's valuable discussions on this thread. Link to comment Share on other sites More sharing options...
berkshiremystery Posted March 27, 2012 Share Posted March 27, 2012 Options Players Bet On Big Upside In AIG, Under Armour Forbes 2012-03-27 http://www.forbes.com/sites/greatspeculations/2012/03/27/options-players-bet-on-big-upside-in-aig-under-armour/?partner=yahootix Link to comment Share on other sites More sharing options...
MrB Posted March 27, 2012 Share Posted March 27, 2012 I don't think I've seen this Reuters Special Report from Dec 2010 posted here. inside aig’s tortuous turnaround Over the past two years, the insurance giant has gone from financial basketcase to a company with a future. Here’s how it happened... http://graphics.thomsonreuters.com/F/12/AIG.pdf Link to comment Share on other sites More sharing options...
MrB Posted March 27, 2012 Share Posted March 27, 2012 New Sigma report. Understanding profitability in life insurance http://media.swissre.com/documents/sigma1_2012_en.pdf Link to comment Share on other sites More sharing options...
PlanMaestro Posted March 27, 2012 Author Share Posted March 27, 2012 I don't think I've seen this Reuters Special Report from Dec 2010 posted here. inside aig’s tortuous turnaround Over the past two years, the insurance giant has gone from financial basketcase to a company with a future. Here’s how it happened... http://graphics.thomsonreuters.com/F/12/AIG.pdf Fantastic! Millstein is another hero of this story, having survived some heavy fire from all sides to reach a workable restructuring. Link to comment Share on other sites More sharing options...
PlanMaestro Posted March 28, 2012 Author Share Posted March 28, 2012 A friend shared the Deutsche Bank report. The core of their argument is something that it is going to be familiar to all. Whatever the US treasury decides regarding its shares we are winners: The $29 "price-ceiling" seems to us a mirage Either the Treasury will sell AIG shares at $29 per share and only $29 per share which means that AIG could be in a position to buy back over 700mm shares over the next year from the Treasury at a price averaging around 44% of book. At that point, we believe that AIG and public participation in offerings will have removed the "overhang." Alternatively, projected "gap ups" in BVPS quarter-to-quarter should stimulate investors to pay more than $29 for AIG shares. Either way, we believe the stock is poised to move higher. ... We had the opportunity to visit with AIG management and dig through their investment rationale for AIG stock on March 20-21. Over the course of the period, we heard from AIG CFO David Herzog, Chartis CEO Peter Hancock, Chartis EMEA CEO & President Rob Schimek, Chartis CFO James Bracken and VP-Investor Relations Liz Werner. At the time of the first Treasury sale in 2Q11, we believed management portrayed the investment rationale for AIG stock as the story of three companies (Chartis, SunAmerica and ILFC) currently underearning their potential with a significant, but vague and uncertain capital management strategy for the overall firm. We believe the capital management story is now tighter and seems poised to occur in a significant and meaningful way. We believe AIG management is prepared to a) buy back more stock in a timeline that is b) more rapid than the market expects. We believe this story is more meaningful for the stock over the foreseeable future than the operational improvements current management can bring to Chartis and SunAmerica (ILFC is now decidedly a non-core asset). The means by which AIG intended to return $25-30 billion of capital to shareholders in the form of share repurchase may have once seemed vague and difficult to imagine, but management is now laying out the component parts of that strategy, such that we expect the company may be able to return $15-20 billion in capital to shareholders in 2012 alone (including the $3 billion already transacted). ... When thinking about future Treasury secondary offerings of AIG shares, management suggests the 50/50 split precedent established in the $6 billion offering from two weeks ago likely understates the proportion the company could hope to represent in future offerings. That said, in the name of "transparent markets," they doubt the Treasury would ever allow them to represent 100% of any one offering. This negates our thought that AIG could engage in block trades with the Treasury. The Treasury seems to believe that "price discovery" needs to be of the utmost importance. AIG management reminded us that AIG was denied the ability to repurchase Maiden Lane II bonds without a broader "auction." However, the price discovery for AIG stock is more "known" as it trades millions of shares daily. Ultimately, management says (to paraphrase), "Let's see what the Treasury does next, and we are investigating every scenario." In the interim, AIG management does not have any authorization to buy shares in the open market today. The $3 billion in shares that the company bought on March 13 exhausted and replaced the $1 billion buyback authorization that was in place. It would seem the next AIG stock repurchase will be tied to an asset sale. Further, AIG cannot initiate a dividend policy until the Treasury has sold its entire stake. Ultimately, we believe the sizable repurchases should lead to a rapid increase in the price of AIG shares. We also note that top management compensation is heavily aligned with shareholders' interest. A substantial portion of top management's compensation is in stock, which has a 1-to-3-year lock-up. To improve AIG's share price is aligned with their personal and professional goals alike. Link to comment Share on other sites More sharing options...
PlanMaestro Posted March 28, 2012 Author Share Posted March 28, 2012 Dividends from the subsidiaries to the Parent. Retained earnings not mentioned. Management intends that the two primary operating subsidiaries—Chartis and SunAmerica— will be able to generate $4-5 billion annually worth of dividends to the “holdco” from operating subsidiaries with the proceeds available for capital management. That number was $3 billion in 2011 due to the high catastrophe experience during the year. That number could be on the high-end of that range in 2012 due to the accelerated receipt of a $1.6 billion dividend from SunAmerica following the Maiden Lane II sale. As a run-rate, the early years 2011-2012 were modeled likely to be on the low-end of that range, while the late years 2014-2015 should be modeled toward the high-end of the range. Link to comment Share on other sites More sharing options...
rranjan Posted March 28, 2012 Share Posted March 28, 2012 I don't think I've seen this Reuters Special Report from Dec 2010 posted here. inside aig’s tortuous turnaround Over the past two years, the insurance giant has gone from financial basketcase to a company with a future. Here’s how it happened... http://graphics.thomsonreuters.com/F/12/AIG.pdf Well written document. It was an interesting read. Link to comment Share on other sites More sharing options...
MrB Posted March 28, 2012 Share Posted March 28, 2012 A friend shared the Deutsche Bank report. The core of their argument is something that it is going to be familiar to all. Whatever the US treasury decides regarding its shares we are winners: Plan, what is the date of that report please? Report seems a tad promotional to me...then you have all that action on the calls...suspicious mind lol ...anyway, just wondering. Link to comment Share on other sites More sharing options...
PlanMaestro Posted March 28, 2012 Author Share Posted March 28, 2012 Plan, what is the date of that report please? Report seems a tad promotional to me...then you have all that action on the calls...suspicious mind lol ...anyway, just wondering. March 25th, 2012. Cramer mentions the report to Benmosche in their interview. Link to comment Share on other sites More sharing options...
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